I have been in the cryptocurrency circle for more than 8 years, with 150,000 yuan. At the beginning, I had difficulty falling asleep and watched the market all night, worried about gains and losses. Now I support my family by speculating in cryptocurrencies. Now my assets are over 8 figures. There were difficult times in the early stage, but I just got through it slowly. I summarized my hard-earned experience.
1. A sharp drop in the morning is often an opportunity to buy:
Changes in market sentiment are especially noticeable in the morning. If there is a decline at the opening, this usually means that investors can find some undervalued investment opportunities and buy at a lower price. Conversely, if the market shows an uptrend in the morning, this is often a good time to sell, as the uptick may be temporary. Remember, these emotional swings in the market actually provide us with many short-term trading opportunities. The key is to learn to think reversely and have the courage to be greedy when others are fearful and fearful when others are greedy, so that you can effectively seize these fleeting opportunities.
2. Steady mindset:
When the market experiences a significant drop, remember not to panic; stay calm to avoid making impulsive decisions due to emotional fluctuations, such as blindly selling stocks to cut losses. The correct approach is to be patient, observe the changes, and wait for signs of a market rebound before making a decision. Similarly, when the market is in a sideways consolidation phase, with neither significant upward nor downward movement, do not rush to enter the market. At this time, the wisest choice is to patiently wait until the market trend becomes clear and forms a distinct directional trend. This effectively avoids potential risks brought about by blindly following the crowd.
3. Always leave yourself a way out.
Everyone starts off blinded by greed, fully invested, and often in situations they feel very confident about. However, as experience increases, one finds that there are many unexpected events. Although the general direction may be correct, many times the entry points one thinks of can deviate significantly from reality.
When capital is small, position management issues are not prominent, but when capital increases, position management becomes apparent. Being fully invested often results in being stuck in short-term losses, which significantly affects operational emotions. Therefore, at all times, one should have a medium to short-term position strategy, and even with 200% confidence, do not take a 100% position, which is equivalent to leaving yourself a way out!
4. Earn your rightful share: Drowning in a sea, only take a sip.
Most stock traders at the beginning want to eat the entire rise and avoid all the declines. In the end, after much pain, they settle on doing one type of pattern. I focus on identifying bottom patterns, so after years of experience, I ended up with nothing to show. What I share is centered around bottoms, and once the bottom is established, I then look for accelerating upward patterns. We can open any candlestick chart and list the patterns that can make money; just choose one common pattern. Then, firmly stick to this one pattern. Over time, this pattern will become your cash machine because you are aware of most of the traps and the opportunities it contains, making it easier to make money and earn what you should.
5. Don’t forget that technical analysis is a probability game: Technical analysis is not absolutely correct; it is essentially a probability game. This means that no matter what technical methods you use to formulate strategies, you cannot guarantee that the market will operate as expected. Technical analysis is merely a prediction and should not be treated as a deterministic event. Regardless of how rich your experience is or how impressive your track record may be, do not take it for granted that the market will follow your technical analysis. If you hold this mindset, it is easy to overbet on a certain preset, leading to excessive risk exposure, and the market will teach you a lesson in no time.
6. Don’t sell at the top with high volume; if there's no volume at the top, run quickly: In cryptocurrency trading, when the price of a coin reaches its peak, the change in trading volume becomes a crucial judgment basis. If a coin has been continuously rising over time and finally reaches a historical high, there is a sharp increase in trading volume. This may indicate that the market's buying power is still strong and has further momentum to push prices higher. For example, if a mainstream coin breaks through a previous high with trading volume several times greater than usual, a large amount of buy orders floods in, pushing the price up by more than 10%. However, if the trading volume decreases in the top price area, that is a very dangerous signal. For instance, if another coin shows a significant reduction in volume at the top, indicating insufficient upward momentum, it may soon start a sharp downward trend.
7. Take profit immediately when price retraces to the entry point: In trading, when investors choose the right market entry timing and trade according to their plan, if it proves that the investor has entered a trending market and is trading in the direction of the trend, then they should patiently hold their position, allowing it to continuously increase profits as prices change. Never sell your position in a panic due to small market adjustments and miss out on larger profit opportunities later. However, there is one situation where it is mandatory to close your position: when the market price retraces back to the investor's entry price, and the position's profit is about to return to zero, one must take profit and exit the position.
8. The trend is king, go with the trend: Once a trend is formed, there’s no need for much analysis; you must follow it, follow the money, do not guess, do not predict, do not assume. If you cannot judge the trend, look at the moving averages. The so-called moving averages differentiate between bullish and bearish trends. Bullish means upward; bearish means downward. For short-term trades, look at the daily moving average; if it breaks with volume, follow it. For medium to long-term trends, look at the weekly moving average; if it breaks with volume, enter; if it breaks down, exit. Going with the trend means not opposing it; if the market is poor, decisively stay out of the market. If the trend is downward, do not easily try to catch a falling knife; do not fantasize about being able to buy into a reversal. The probability of such situations is too low. The core of trading cryptocurrencies is to only engage in high-probability events and abandon low-probability events.
9. Focus on the extreme, simplify complexity: In fact, I have written a lot about techniques in previous articles, but no amount of technique can fit every person; it depends on each individual's character, experience, and understanding. Techniques can be learned, but it’s more about refining a method that suits you after practical learning. Popular techniques don’t necessarily make money, while money-making techniques aren’t always popular. At a certain stage of trading, it’s essential to learn to do subtraction, to learn to let go and return to simplicity; the simplest path is best. It doesn’t matter if the method is basic, as long as it makes money. It doesn’t matter if the method is singular; simplicity allows for easy circulation. How to find this point? Keep testing, keep modifying, keep refining. If it works, then amplify it; only earn from one model and only lose from that same model. Remember not to waver, understand the importance of choices. This message is for those who learn techniques daily but still feel confused. Stop, slow down, and understand that being slow is fast; take it seriously.
10. Don’t make small gains and large losses: Just like in playing a game of baccarat, if I win 500 after betting 100 or 200, I'm satisfied and I withdraw. The next day, I win another 500 and withdraw again, feeling happy. But by the third day, things don’t go so smoothly; I lose 500 and, unwilling to accept it, I continue to gamble, wanting to win back my losses. I bet 500 and lose 1000, losing all the profits from the previous two days. Then, unwilling to accept my losses, I keep betting, throwing around 500 and 1000 chips indiscriminately, ultimately losing tens of thousands. This is a typical example of winning small and losing big. Every time you enter a trade, you risk making just a little profit, even before reaching your take-profit or protective stop-loss, and you exit happily. But when you lose, you stubbornly hold on, even until liquidation, which means you are not suited for investing or trading, and even less for gambling. Casinos love people like you because you won’t always have good luck; winning a little every day, a few hundred, but on days when luck runs out, you dare to bet heavily, losing tens of thousands. This is what the market calls a novice, the kind that seasoned traders prefer.
If you are still confused, I hope this helps; consider following my profile.